Gov. Robert L. Ehrlich Jr. signed a bill yesterday creating a low-interest loan program for Marylanders who still need financial help to rebuild homes damaged by Tropical Storm Isabel, and he announced that his administration will quickly process applications for the aid.

"This is something we need to do at a very high level for our people," Ehrlich said.

The bill signing comes amid increasing attention to the plight of Isabel victims in Baltimore and Anne Arundel counties and other waterfront areas in Maryland. The head of the National Flood Insurance Program has promised to re-evaluate claims from the storm and to improve the response to future disasters.

Yesterday, for the first time, Federal Insurance Administrator Anthony S. Lowe toured the flood-damaged communities of Edgemere and Millers Island in eastern Baltimore County and met with families who have found their insurance settlements far below what they need to rebuild.

"People are looking for help to get through this and get back in their homes, and I'm sympathetic to that," Lowe said.

One of the victims Lowe met was Debbie Simon, an Edgemere resident who has been living with her husband for the past several months in a trailer provided by the Federal Emergency Management Agency. She said they paid for $177,000 in flood coverage for their modest brick bungalow, but their insurance company offered them only $57,000 to repair their home. Contractors have estimated repair costs at more than $100,000.

"It's a nightmare in there," she told Lowe, pointing to the trailer. "And we're still looking at a long road ahead."

The legislation allows the state to offer storm victims second mortgages that are interest-free or with rates no higher than 2.5 percent, depending on the applicants' income. The measure, approved as emergency legislation by the Maryland General Assembly, went into effect immediately.

Under the program, storm victims would be able to defer principal payments until they sell or transfer ownership of the house, with the idea that victims would be able to rebuild or repair their homes without paying much more than the cost of their original mortgage.

According to materials released with the bill, a family taking out a $50,000 loan at the highest interest rate allowed under the law would make monthly payments of about $104.

Combining state reserve funds and federal grants, the law allocates $4.5 million for the loans. Ehrlich announced a supplemental budget last week that, if approved, would add another $3 million.

The law also establishes a program in which the state will join with local banks to make loans in excess of the value of an Isabel victim's home. Typically, lenders will not issue such mortgages, but the state, working with the Maryland Bankers Association, has entered agreements with 15 banks to guarantee part of the loans.

The interest rates for those mortgages will be set by the banks, but the state allocated another $1.5 million to subsidize flood victims' interest payments for five years. Ehrlich's administration estimated that the state would be able to leverage $74 million in private loans through the program.

State officials say that more than 200 Maryland families are still living in trailers or in other temporary housing months after the storm.

Bernice Myer, a Millers Island resident who founded an Isabel advocacy group, said the loans do not take the place of fair settlements from insurance companies. One of the chief complaints of Isabel victims has been that flood insurance settlements have fallen far short of costs to rebuild.

"If the insurance companies would pay, that's certainly better than any loan," Myer said. "But if not, and a loan is the next best thing, we need it."

Ehrlich said he has directed officials from his administration to form a "SWAT team" to process applications for the loans within 30 days.

Audrey Scott, the state's director of planning and Ehrlich's liaison for Isabel issues, said the administration has a database of more than 18,000 Marylanders who requested assistance after Isabel. In addition to contacting those people, state workers will visit communities affected by the storm to identify victims, Scott said.

Information about the program is available through the state Department of Housing and Community Development, 1-866-227-2497, or on the Internet at www.dhcd.state.md.us.

Baltimore County Executive James T. Smith Jr. - who with Anne Arundel County Executive Janet S. Owens and Harford County Executive James M. Harkins testified in support of the bill - said, "It is not the whole answer, and I hope people realize it is not the whole answer.